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ISSN: 2280-3866 Volume 2 – Issue 2, 2013
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Network Approach and Stakeholder
Management
Mauro Sciarelli, Ph.D.
Full Professor of Business Management. University of Naples "Federico II", Naples, Italy.
e-mail: mauro.sciarelli@unina.it. Corresponding author.
Mario Tani, Ph.D.
Research fellow, University of Naples "Federico II", Naples, Italy.
e-mail: mario.tani@gmail.com.
Published online on April 1, 2013.
DOI: 10.7350/BSR.V09.2013 – URL: http://dx.medra.org/10.7350/BSR.V09.2013
ABSTRACT
Recent economic crises show that enterprises cannot be managed focusing only on economic
values instead managers should acknowledge their own enterprises' responsibilities toward the
society as a whole. Stakeholder Management Theory can help managers accomplishing this very
same daunting task. This theory demands managers to reckon the reciprocal influences linking
other social actors to the enterprise activities and to understand the relative effects. While most
of the works in this theory has been geared towards defining, identifying and managing each
single dyadic relationship some other scholar have highlighted the need to focus on the
stakeholder network to correctly assess each stakeholder's role and to fully grasp the long term
effects enterprise's action will have.
In this paper after a review of the main topics in stakeholder management theory, we classify the
various approach to Stakeholder Management Theory to identify relevant theoretical
contributions and to highlight how the theoretical gap can be crossed using the tools of Social
Network Analysis and embracing the network approach to stakeholder management.
Keywords: Stakeholder Management, Relationships, Sustainability, Network Approach, Social
Network Analysis, Network Measures.
1. INTRODUCTION
Recent economic crises urge managers to go beyond the shareholder view which focus only on
economic values in order to maximize shareholder value. Managers need a broader perspective
in their decision making processes in order to account for the more than the mere economic
motivations for their enterprises to be successful. This perspective is well defined by Stakeholder
Management Theory.
A good example of the limits of the shareholder view is found in the Deepwater Horizon
disaster, also known as the British Petroleum Oil Spill. Stout (2012) highlights how the crisis is
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the direct result of BP's policies of cost reduction driving it to save money skimping on safety
measures; the consequences of the Spill have not been limited to fishing and tourism industry
but it has effected shareholder too as BP was fined for more than $ 4.5 billion; moreover its
market value was cut in half, common stock plunged from $60 to $30 per share, suffering a
capital loss near $ 100 billion and forcing enterprise's management to cut dividends. The
Deepwater Horizon disaster clearly shows as managing the enterprise only for the shareholders
has fired back with dire consequences for those very same stakeholders.
Cases like this show that managers should go beyond the short term and the requests by a single
class of actors (the shareholders) to incorporate in their decision making processes the requests
of several social actors (the stakeholders) factored in with a long term perspective.
In management studies several theories have asked managers to look beyond the single
enterprise to the relationships the enterprise have in the environment.
For example in the resource based view (Wernerfelt, 1984; Barney, 1991) the source of the
sustainable competitive advantage is deemed to be in the resources the enterprise can get access
to, both through ownership and relationships. A tighter look at the role of relationships comes
out from the Relational View (Gulati, 1999; Dyer & Singh, 1998) that held relationships are the
best way to create a competitive advantage as they help in getting access to resources without
having to pay their full price.
The same idea of relationships as the core of competitive advantage have been developed in the
broader Market-Driven Management theory (Day, 1994, Lambin, Chumpitaz, & Shuiling, 2007,
Sciarelli, 2008) where the source of a sustainable competitive advantage is the firm's
management capability in creating, and keeping, relationships with the other value chain players.
Even more direct is the approach by Vital System Theory (Golinelli, 2002; Golinelli, Gatti, 2006)
that, building on management cybernetic (Beer, 1959; Beer, 1972), focus the spotlight not in the
relationships linking the enterprise to the external environment but in the interactions running
through them, seen as the dynamic factor making them valuable; according to this theory, in fact,
relationship are only a static element that can become “viable”, and dynamic, only when the
enterprise learns, adapts and evolve in order to become more effective in dealing with the
external environment.
On the same side Stakeholder Management Theory (Freeman, 1984), asks managers to run their
enterprises satisfying the requests of various other external environment's actors. In fact this
theory sees enterprises as embedded in a network of bi-directional relationships with several
external actors. These actors, called “Stakeholders” (Freeman, 1984: 53), are those subjects that
are significantly influenced by the firm, or that can significantly influence the firm itself in a
positive or negative way. Stakeholder Management Theory asks managers to “create as much
value as possible for stakeholders, without resorting to trade-offs (between them)” (Freeman et
al., 2010: 28).
Through the lens of this theory enterprises are seen, and should be managed, as a part of a bigger
web of complex, stable and mutually influencing relationships (Sydow & Windeler, 1998); these
relationships will induce managerial behaviors to satisfy stakeholders expectations (Rowley,
1997). Moreover these relationships are multi-purpose ones that are only partially based on
economic reasons while combining social considerations, and environmental ones too (Wicks &
Harrison, 2013).
In stakeholder management literature we have identified two main streams; the more diffused
one has focused on identifying which stakeholders are relevant and on defining the right
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strategies managers can use in dealing with them (Mitchell et al., 1997; Kochan & Rubinstein,
2000).
The other stream urges managers to go beyond managing the relationship with each single
stakeholder but to analyze the whole structure of the relationships network the enterprise is
embedded into. Some authors asks managers to take into account even those actors their firm is
not directly related to (Sirgy, 2002). Rowley (2000) suggests that managers can use this approach
to infer potential network evolutions; the author uses this approach to get a more dynamic
approach to stakeholder management.
In this paper we carry on a literature review focused on this second, more network oriented,
approach to stakeholder management. Our purpose is to get a better understanding of how
stakeholder management literature has dealt with the issues of interactions between stakeholder
and the relative effect network structure has on them, and on the firm too.
We focus on these topics as they can have a significant effects on each stakeholder value systems
changing how they perceive the enterprise's actions and influencing their evaluations and
responses (Wicks & Harrison, 2013).
Moreover the network structure, and its properties (Wasserman & Faust, 1994; Prell, 2012), can
be used to understand how the network will evolve in time helping managers to create a more
pro-active strategy and the academicians to understand the roots of economic crisis.
2. THE STAKEHOLDER THEORY
Efficient Stakeholder Theory was developed in the '80s in the works of Freeman (1984) and
Freeman and Reed (1983). Its core point is that the creation and the ongoing operations of each
enterprise is the results of several actors' activities, these actors will be later identified as the
enterprise's stakeholders. Building upon this central point the theory sees the enterprise's main
goals as some kind of combination of the various interests these actor are caring for.
Stakeholder Management Theory is built upon ideas developed in the Stanford Research
Institute, taking into account several works from organizational behavior (Simon, 1947; March &
Simon, 1958; Cyert & March, 1963), resource dependence theory (Pfeffer & Salancick, 1978),
strategic planning (Lorange, 1975) and some other different theoretical fields (Nasi, 1995;
Freeman et al., 2010).
In organizational behavior (Cyert & March, 1963) field the firm had to balance the various
claims their stakeholders vouched for in order to define viable objectives.
A central role of the interactions between the enterprise and the other organizations in the
environment it is embedded into has been developed into the resource dependence theory
(Pfeffer & Salancik, 1978). This theory sees the environment and the enterprise as strongly
interconnected; the enterprise will depend on some of the actors in the environment in order to
get access at resources they control. In a similar way some other actors will depend on the
enterprise, as they will need to get access to some kind of resources that the enterprise controls.
Another root of the Stakeholder Theory can be found in the strategic planning approach to
management as outlined by Dill (1975) when he defines the three main challenges of strategic
prowess as the need for management to understand the environment, to respond to it and to deal
with the individuals and the organizations trying to influence management's strategic decision
making processes.
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The Stakeholder Theory has been a managerial approach since its own foundation; it has been
developed to give managers a broader perspective on their responsibility for enterprise's
activities and for the related value creation processes (Rusconi, 2007); its main goal is to help
managers to find the balance between the various relationships that can impact upon the
enterprise and affect it while it is trying to reach for its own goals (Freeman & Philips, 2002).
According to Donaldson and Preston (1995) defining the idea of the enterprise's stakeholders this
theory has succeeded in being both descriptive, instrumental and normative.
This approach sees the enterprise as a bundle of relationships between its' activities various
stakeholders. Managers has to combine the efforts by the various actors so to make them interact
in value creating processes (Freeman et. al., 2010: 24).
The theory's development has focused on finding an answer to three main questions:
Who are the enterprise's stakeholders?
How they should be managed?
How do managers create value for the stakeholders?
The first question is a focal point in the theory development as the very same term stakeholder
has been the center of an hot and fierce debate. In 1997 Mitchell, Agle and Wood (1997: 858)
had found no less than 27 different definitions of the term, some years later Hinna (2002: 7)
divides them in 5 main categories characterized by a more and more active role of the
stakeholder starting from considering only those actors influenced from the enterprise to those
authors defining stakeholders for their participation in the value creation processes.
Usually stakeholders are all those who have a stake in the enterprise; i.e. they have something to
win, or to lose, from enterprise's operations, it is something more than a general interests in what
the enterprise wants to do (Clarkson, 1999).
Mitchell, Agle and Wood (1997) divide the perspectives on stakeholders' identification in two
main perspectives: a narrow one and a broad one.
In the narrow perspective only those actors the survival of the organization depends upon can be
considered legitimate stakeholders. This perspective aims to focus manager's attention on those
stakeholders that can directly impact on the economic interests of the enterprise or can strongly
affect some other resource the enterprise needs. It is a normative approach driving managers to
factoring in the expectations of only few, meaningful, actors the enterprise is related to.
The broad perspective, instead, defines the stakeholders as all the various actors that can
influence, or be influenced by, «the achievement of an organization's objectives» (Freeman &
Reed, 1983: 91). This perspective is built on a more thorough analysis of the environment
enterprises operate into highlighting that there is a large number of subjects that can affect it. As
a consequence managers are called to define a map of these actors, to deeply comprehend their
expectations and their motivations.
The need to manage stakeholders' relationships asks managers to go beyond the mere
transactions and the relative economic impacts and to refer to the ethical principles of justice,
transparency and fairness while adopting a more general reciprocity principle.
Clarkson (1999) identifies some main principles to make managers more aware of their
responsibility towards the other stakeholders and the need to involve them in decision making
processes in order to help cooperation, to stimulate a profitable dialogue with them and eliciting
a stronger bond, characterized by a reciprocal trust between the enterprise and the stakeholder.
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Freeman and Velamuri (2006) define some responsible behavior norms in dealing with
stakeholders; they ask managers to understand that real people are driven by a more complex set
of goals than the mere economic, profit-oriented, ones; their value creation processes should
involve stakeholders in a cooperative value creation dynamic leading to a continuous process re-
engineering effort driven by a stakeholder oriented perspective.
According to Goodpaster (1991) stakeholder management process should be divided in two main
phases: stakeholder analysis and stakeholder synthesis.
In the first phase the managers will define and identify their enterprise specific stakeholders in
order to evaluate them and their stakes; in the following phase these evaluations will lead
managers in defining a strategic path based upon economic and ethical principles too.
Managers will have to analyze the various stakeholders in order to find out the most relevant
ones and to divide them in homogeneous groups.
Mitchell, Agle and Wood (1997) hold that the phase of stakeholder analysis should be oriented
by the concept of salience. Salience is a tri-dimensional construct based upon the power the
stakeholder has, its legitimacy on making requests to the enterprise and the urgency of its stakes.
Only those stakeholders that have the power to influence the enterprise's activities, that are
legitimated by the society and that stand up for urgent issues are the relevant ones, their request
are those that managers need to fully answer trough enterprise's activities. If only two of the
attributes are present then the stakeholders expectations will be considered but managers will not
be strongly pressured to answer them. If the stakeholder has only one attribute it should not be
considered as a relevant one.
Central in the theory development has been the main concept that the enterprise should be
managed in order to create value for all its stakeholders, and not for only some of them.
The theory is built around a fairness principle (Phillips et al., 2003) where the various
stakeholders are called to participate in the processes to create, and diffuse, value. They will be
rewarded for their involvement mediated by values and ethical principles.
The value creations processes itself is not limited to creating economic value as the enterprise is
seen as an open-system legitimated to survive by its role in the society (Sciarelli, 2012). It's
operations are not limited to actions done in the market but they are related to the broader
environment of its stakeholders set, connected to the enterprise by more than the mere economic
transactions (Buchholz, 1991).
An element that can explain how enterprises do really create stakeholder value is the idea of
stakeholder networks (Rusconi, 2007) where each stakeholder tries to comprehend and
harmonize its own perception with the other ones reaching a dynamic balance.
Identifying stakeholders according to the networks they are into can be useful for managers as it
can help them to comprehend how the way a firm treats one stakeholder will influence the
relationships with some other stakeholders (Freeman et al., 2007). It follows that the way an
enterprise manages its relationships generates a global effect greater than the sum of the direct
effects it has on each relationship taken separately.
Wicks and Harrison (2013) link this interdependence to the phenomenon of generalized
exchange. There is generalized exchanged when multiple actors are related in a way that what
actors take from and what they give to each other are not in direct one-to-one correspondence.
This phenomenon is relevant in stakeholder management as the interactions between
stakeholders and the enterprise, and those between stakeholders too, do happen over time and the
relative expectations are influenced by the specific perception of the results previous interactions
in the network have shown.
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3. THE NETWORK APPROACH IN STAKEHOLDER MANAGEMENT THEORY
In spite of network being a relevant factor in stakeholder management the main contributions in
this field have rarely gone beyond putting the emphasis on the dyadic linkages between the
enterprise and each single stakeholder (Rowley, 1997). Stakeholders are seen as actors in
interdependent, mutually influencing, networks since the first works on Stakeholder
Management Theory. In fact Freeman (1984) defines the tools of stakeholders maps and
stakeholders scorecards in order to give managers a way to assess which needs the various
stakeholders the enterprise is related to have and to help managers figure out the relationships
linking each of them to the others.
How networks and their structure should be used in stakeholder management is still under
debate. There are several different approaches ranging from the traditional ones, asking
managers to focus on the salient stakeholders (Mitchell et al., 1997), to broader perspectives
asking managers to take into account the very same structure of the stakeholders network
(Rowley, 1997).
We have classified the various approaches to stakeholder management using two different
aspects of the relationships. The first aspect we have considered is if the author asks managers to
factor in the stakeholder not directly related to the enterprise; the second aspect we have used to
classify the various approaches to stakeholder management is if the authors are asking managers
to evaluate each stakeholder in one-to-one relationship with the enterprise or if they are asking to
manage the network as a whole. The resulting approaches are shown in the following Figure 1.
Figure 1. Approaches to stakeholders network.
In the figure the bold lines and circles represent elements the approaches ask managers to put
their attention on.
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The approaches' main characteristics and their main writers have been summarized in the
following Table 1.
Table 1. Main Characteristics of the approaches to stakeholders network.
Focus Description Relevant Authors
Dyadic
relationship
Managers should define the importance of
each stakeholder and answer to the most
relevant ones
Savage, Nix, Whitehead and Blair,
1991; Mitchell, Agle and Woods,
1997; Kochan and Rubinstein, 2000
Ego-network Managers should define the whole set of
stakeholders and try to answer to all the
relevant requests
Donaldson and Preston, 1995;
Clarkson, 1995; Davenport, 2000;
Post, Preston and Sachs, 2002;.
Multiple
Interactions
Managers should understand how
stakeholder's interacts and how they relate
to their environments
Freeman and Evans, 1990; Wood and
Jones, 1995; Sirgy, 2002; Preble,
2005; Wicks and Harrison, 2013
Complete
Network
Managers should understand the structure
of the network the stakeholder act in in
order to find the most relevant interests
Freeman, 1984; Rowley, 1997;
Frooman, 1999; Scott and Lane, 2000;
Mahon, Heugens and Lamertz, 2004;
Vandekerckhove and Dentchev, 2005.
3.1 The Dyadic relationship approach
This approach encloses those models asking managers to focus on the most relevant stakeholders
in order to let the enterprise reach for its own goals. The relationship with these stakeholders are
seen as dyadic relationships that are not influenced by the other relationships each of the two
nodes have.
These studies acknowledge that the enterprise can be subject to conflicting requests by the
various stakeholders and they try to give managers various tools to identify the most relevant
ones and to select the most appropriate strategies in dealing with each of them.
The identification problem is faced providing some common criteria to identify the most
important actors for a given organization. In this stream of research we have the saliency model
by Mitchell, Agle and Woods (1997) based upon social actor's legitimacy and power and upon
the urgency of the interest protected. Another approach is Kochan's and Rubinstein's one (2000)
who define the stakeholder's saliency as a function of his ability to provide valuable resources for
the enterprise, to hinder retrieval of valuable resources from other sources and, in general, of the
influence it has inside the organization.
After the identification of the relevant stakeholders their relationship with the enterprise is
evaluated to define the most appropriate strategy to adopt in order to answer each specific
requests (Savage et al., 1991).
3.2 The Ego-network approach
We have grouped the studies dealing with conflicting stakeholders' requests in this approach.
They ask managers not to focus on each stakeholder but to put their effort on understanding the
requests of the whole network of stakeholders they have a relationship with before defining their
strategies; these studies asks managers to focus on their whole egonetwork.
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As Freeman et al. (2010) have highlighted this perspective is based upon one of the very
fundamentals of Stakeholder Management: the need for managers to evaluate the requests by the
various stakeholders without incurring in trade-offs between them.
Donaldson and Preston (1995) adopt this point of view in their managerial thesis of stakeholder
management when they acknowledge that the theory asks managers to evaluate simultaneously
all the legitimate stakeholders' requests considering them as a system.
According to Clarkson (1995) this way of factoring in stakeholder requests is more coherent with
actual managers behavior than the previous one as his ten-years research project has highlighted
that managers respond to stakeholder issues more than to single stakeholders.
This approach should be better able to answer to the real needs of managing stakeholders as
some issues are related to more than one single class of stakeholders making them more salient
than what could be understood using the previous perspective (Clarkson, 1995: 99).
A similar approach is supported by Post, Preston and Sachs (2002) building upon the extended
enterprise model of supply chain management (Greis & Kasarda, 1997) which asks managers to
reckon the whole value chain in their decision making processes. They ask managers to respond
to all the actors the enterprise has a relationship with, both market and non market-based ones, in
order to compete successfully and to be legitimate in the social and political arenas.
Another reason to evaluate the stakeholder set as a whole is that the stakeholders themselves
expect the enterprise to answer to all the various requests present in the stakeholder network as a
proxy for good corporate citizenship (Davenport, 2000).
3.3 The Multiple Interactions approach
This third approach encloses the studies asking managers to take into account not only the
stakeholders their enterprise is in relation with but to take into account even the interaction
between the various stakeholders and the relationships between them.
This approach is based upon a more realistic perspective on the relationship between the
enterprise and its own stakeholders. The enterprise itself is seen as part of a broader stakeholder
environment made of several stakeholders interacting at several levels both between themselves
and between each of them and the enterprise (Freeman & Evans, 1990).
Some authors' classification of stakeholders are clearly inspired by this perspective on
stakeholder management. Sirgy's classification introduces the class of distal stakeholders (2002)
made of the stakeholders indirectly influence the survival and growth of the business firm
through influence exerted on the firm’s stakeholders. This class has the same characteristics of
the one Preble (2005) identify as secondary stakeholders but this author acknowledge a more
general influence power to all the various stakeholders, both direct and indirect ones.
Wood and Jones (1995), in their review of empirical research on Corporate Social Performance
explain that stakeholders are not only a source of expectations but they are the very same
subjects to evaluate how those expectations have been met. According to Wood and Jones (1995:
231) these evaluations are based not only upon their own experiences but on those by the other
stakeholders in their same environment too. Managers should take into account stakeholder
interactions too as they can change how the enterprise's behavior is perceived and evaluated in
the external environment.
Wicks and Harrison (2013) affirms that stakeholders' perception of the value that an enterprise
can create is a multidimensional construct that managers should evaluate as a whole as the
various dimensions are mutually influencing each other. The interactions between stakeholders
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are meaningful as they let the value created by the enterprise, or destroyed by it, to propagate in
the network trough them multiplying the net effect of the enterprise's actions.
3.4 The Complete Network approach
The last approach focuses on the role of the stakeholder network structure in evaluating the
stakeholders' issues to focus on. This approach was already present in the seminal book by
Freeman (1984), where the author suggests managers to make use of stakeholder maps in order
to visualize the indirect relationships between them and urges them to understand how some
stakeholders can influence the other ones.
In a more recent interview Freeman holds that:
«[...] organizations, viewed as open-systems, are part of a broader network not isolated and
independent units. Identifying stakeholder, and the interconnections between them too, is a
crucial point for this approach.» (Rusconi, 2007i).
The network structure represent the paths indirect stakeholders influence power will go through
to affect the enterprise's actions. Frooman (1999: 198) identifies a class of indirect influence
pathways as those strategies a stakeholder can use to influence another organization he is not in
relationship with manipulating the flow of resources this enterprise needs trough an ally. These
strategies can rely both on having access to specific resources (Pfeffer & Salancik, 1978; Barney,
1991) and on being in a network's position to get control over them (Granovetter, 1985; Burt,
1992).
Network structure can influence the stakeholders' perceptions in two different ways (Scott &
Lane, 2000). The more frequent the interactions between the stakeholders become the easier it is
for the various stakeholder to share behavioral expectations so their goals tend to align and create
a stronger pressure on the enterprise. The tighter the organizations are linked the more they are
able to control information and resource flows becoming more influential in the network.
Managers should focus on the network defined by the enterprise's stakeholders and the relative
web of relationships to fully grasp the way stakeholders' interactions can impact on the
organization. Knowing the network structure can be useful in two different ways (Rowley,
1997). On one side it highlights who are its indirect stakeholders, those actors that can influence
the organization without having any direct connection to it and how these influences can
manifest. On the other side going beyond the enterprise egonetwork to represent the
stakeholders' complete network will let managers leave the enterprise-centric view of the
previous three classes in favor of a more realistic understanding of the role of the enterprise in
the network as «a stakeholder of many other focal points in its relevant social system» (Rowley,
1997: 892).
This perspective will help managers get an holistic view of the environment and the actors
operating in it as it will let them understand how the various stakeholders are related to each
other.
Rowley (1997) suggests analyzing the stakeholders network structure with the tools of Social
Network Analysis as these tools have been developed to highlight how actor's position and
relationship can influence their behaviors (Wasserman & Galaskievicz, 1994; Barabasi, 2003).
Mainly Rowley (1997) suggests focusing on two main network parameters: Density and
Centrality.
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The Density is the probability that any two actors in a network are linked (Wasserman & Faust,
1994). It is a measure of network cohesion, the higher it gets the more stable the network will be
(Watts, 2004) and the more the network will be prone to develop his own behavioral norms that
all the actors will be expected to comply with (Kreps, 1990; Burt & Knez, 1995).
The other parameter, Centrality, can be measured using three different indicators (Brass and
Burkhardt, 1993); the first, degrees centrality, measures the popularity of the actor, the second
one, closeness centrality, is a measure of how simple is for the actor to to reach for the other
actors in the network while the last one, betweenness centrality, is a measure of the control the
actor has on the other part of the network.
Another reason to use a network perspective has been given by Vanderkerckhove and Dentchev
(2005); the authors use an approach similar to Granovetter's (1973) work on weak ties where
acquaintances are seen as the driver of changes in the network. The authors affirm that managers
and entrepreneurs can use the stakeholder's perspective as a way to understand network evolution
and how issues relevance is changing in the stakeholders' environment.
One way of making use of Social Network Analysis tools is to integrate these two reasons in a
single complex analytic process exploiting concept of affiliation networks, a type of network
structure linking where actors that have shared some kind of common experience are linking.
According to Lattanzi and Sivakumar (2009) these are the kind of networks where most of the
weak ties are generated.
The various issues presented in a given stakeholder network can be used as the events in an
affiliation network linking them to the stakeholders (Mahon et al., 2004) highlighting potential
new relationships that can be used to explain how issues do became more or less relevant in the
stakeholder network overtime (Wasserman & Faust, 1994).
4. DISCUSSION AND A PROPOSAL FOR FURTHER RESEARCH
Stakeholder management theory should deserve more attention to network structure. First of all
for its ability to reconcile the ethical point of view with an instrumental vision of the theory
itself. Trough the concept of generalized exchange (Wick & Harrison, 2013) and the studies on
stakeholder perception (Clarkson, 1999) this approach helps explain how taking into account
stakeholder requests, or failing to do so, can come back to the enterprise with a far greater effect
than what would be possible to explain looking only at the dyadic relationship between the
enterprise and its direct stakeholders.
Moreover, as the network approach can help managers get a clearer picture of the dynamics
driving the evolution of the issues the network, as a whole, will confront the enterprise with
(Vanderkerckhove & Dentchev, 2005; Mahon et al., 2004), it will help them in getting a more
pro-active stance in dealing with stakeholders. This effect could be even more significant taking
into account that the relationships with the various stakeholders take place over time and the
their evaluations of the enterprise activities are not only influenced by their previous experiences
but even from the other stakeholders' ones.
The second reason is that the network approach can help managers in getting a more realistic
picture of the role the various stakeholder have and how they relate to each other (Rowley, 1997;
Rusconi, 2007). This more realistic picture is needed if managers want to comprehend how the
different stakeholder can act to defend their interests (Frooman, 1999) and which other
stakeholders will be called upon to support the specific issues. Another advantage of visualizing
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185
the stakeholder network is in helping managers to understand the enterprise's real position in the
network structure letting them get a clearer picture of the real influence power they can use to
further the enterprise goals (Rowley, 1997).
Some scholars (Rowley, 1997; Mahon et al., 2004) have proposed to use various tools of Social
Network Analysis in order to study the network structure. Social Network Analysis has the
advantage of using both graphs and analytic tools (network parameters and other similar
measures) to study the structure of the network and the power of the actor within it.
Using social network analysis measure can help crossing the bridge between the first, more
traditional, approach to stakeholder management and the network-based one. If compared to the
salience model by Mitchell, Agle and Wood (1997) the network approach can be used to
complement both legitimacy and power of the actor. Legitimacy can be easily proxyed by degree
centrality or using affiliation networks while power can be measured with betweenness centrality
and closeness centrality.
Moreover Social Network Analysis can help with measuring the very same concept of Influence
using another centrality measure: eigenvector. This measure, proposed by Bonacich (1972;
2007), is based upon the premise that a node's importance is determined by how important its
neighbors are (Jackson, 2008).
Even if Social Network Analysis has been considered a powerful tool to understand relationships
we have to acknowledge that all the various measures presented in the network approach to
stakeholder theory derive their effect only from the network structure only without accounting
for the specific stakeholder's characteristics, the main point in the dyadic approach. In short these
measures fail to explain how these two different sides of the same coin interact with each other
and thus they fail to define an holistic analytic framework providing only a partial picture of the
stakeholder environment the enterprise operates into.
Still our literature review on stakeholder management theory points out two main needs for
future researches in order to match the recent advancements in Stakeholder Management Theory
and in Social Network Analysis too.
The network approach to Stakeholder Management Theory have only marginally touched the
surface of social relationships' multiplexity using the tool of affiliation networks (Lattanzi &
Sivakumar, 2009) but stakeholders are really embedded in several networks mutually influencing
and interacting. Scholars in Social Network Analysis field have developed tools to analyze
multivariate social networks as exponential random graph models (Frank & Strauss, 1986;
Robins et al., 2007; Lusher et al., 2012) a family of statistical tool developed to comprehend how
general characteristics of actors are driving structural changes in networks that can take into
account multivariate relationships.
There's a need for scholars to develop an analytic framework balancing stakeholder
characteristics and network structure. In order to develop this analytic frameworks further
research should test how the stakeholder's network evolution is related to network measures and
to stakeholder's characteristics; in Social Network the actor-based models (Snijders, 2005;
Snijders et al., 2010) have been developed to study how network structure evolves as the result
of both the characteristics of the network structure and the actors own characteristics.
Understanding how these two aspects relate each other should be helpful in defining if a given
issue has to be studied at a network level or at the actor level, providing a viable tool for
managers in defining how to deal with stakeholders (Golinelli & Volpe, 2012).
Finally we think that Stakeholder Management Theory is a meaningful lens to enterprises'
relational and systemic nature. This is still a theory in fast evolution enclosing several
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186
approaches. Some of these approaches are focused on managing each single relationship between
the enterprise and its stakeholders while some other, more innovative and challenging, are more
geared to acknowledge the complex and systemic nature of the relationship network the
enterprise is embedded into. Scholars should focus their research on this more holistic approach
aiming to develop new analytic frameworks to understand the effects of the network of
relationships and, hopefully, new tools to support managers in stakeholder management.
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